Utah Department of Agriculture and Food

ARDL - Canal Company Loans & Pricing Changes

New Loan Pricing and
New Program for Irrigation Companies

The Conservation Commission recently ratified changes involving loan pricing and liberalization of loan terms in order to make the program more accessible and competitive while continuing to limit risk prudently.  The changes also include a new program designed to help irrigation companies with credit needs that cannot necessarily be satisfied by the Division of Water Resources because of ARDL’s ability to grant smaller loans in a relatively short time. These changes are specified in Parts 12 and 13 of the ARDL Policies and Guidelines.  Click here to review the full document.

The changes regarding pricing of loans are as follows:
   Rates and Terms: Loans of less than $52,000               3.00%
   Loans more than $52,000 but Less than $104,000       2.75%
   Loan greater than $104,000                                     2.50%

Maximum Term                                                        15 years
Maximum Term (Chattel secured)                                 7 years
Maximum Term (refinance of ARDL debt)                     12 years
Maximum loan size (chattel secured only)                     $52,000
Maximum loan to value ratio for all secured loans:                70%

Guidelines for the new loan program targeting irrigation companies are as follows: 

Irrigation companies within the state of Utah have occasional needs for long term loans for purposes that are consistent with ARDL policy and guidelines.  Often, the structure of these companies precludes their qualifying for loans due to lack of assets that are suitable for pledging as loan security.  While financing is available from the Division of Water Resources, that process involves significant time for completion and is generally suitable only for larger loans.

Irrigation companies that are classified as such by the Division of Water Resources and incorporated in Utah and in good standing are eligible to apply for loans to finance ARDL qualified projects.  The funds may be used for purchase of materials and equipment and/or for labor for such projects.

Unsecured loans to irrigation companies will be considered to applicants based on the following criteria:

A.      The company must be recognized as a canal company by the Utah Division of Water
         Resources, incorporated in Utah and in good standing.

B.      The bylaws must authorize the company to assess the shareholders for funds to make the
         loan payments.

C.      The company’s financial statements, ownership structure and water right must be valid and
         support the size of the loan.
D.      The company’s credit record must indicate a history of timely payment of all obligations.

E.      The company’s board of directors must approve the project and the indebtedness.

F.      Authorized officers of the borrower will sign for the indebtedness. 
         In most cases an individual will not be required to personally endorse or guarantee the loan.

G.     Unsecured loans will be fully amortized over a period not to exceed ten years.

Pricing and approval of all unsecured loans to irrigation companies will be the same as for all other loans under this program.







posted: Dec. 10, 2013